Premium bonds

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whambamboo wrote:

yes indeed. The key is that you get a letter saying 'you've won'. And it's £50, great, let's go spend it. However, if you had £1000 in the bank you wouldn't get excited that you'd got £50 interest.

That's a very good point.

I wonder if anyone's ever tried to find out what % of premium bond winnings is reinvested rather than spent?

I would assume it's even less than windfalls, which can be paid in shares or sometimes cash added to an account - so keeping the bonus temporarily at arms length.

exel1966

One factor to be taken into account is what percentage of holders would currently have the £30K max therefore preventing them from re-investing.

ReportInvestor

Fair point.

But would they reinvest it in anything else?

ManAtHome

Good place for a small bit of 'mad money' with a potential return of 10,000 to 1 (if you buy £100 and win a million...).

Obviously for most people it isn't going to happen but only costs you 3 or 4 quid a year. Even if you're only likely to win once every 20 million years or so this is just as likely to happen in the first month as the last...

matt4504

Just a quick question as i've forgot, to cash them in, do I have to leave them in a month or can i request a refund at anytime?

Thanks,

Matt

ManAtHome

Can get a refund at any time - it's when you buy them you have to wait a clear month before they're included in the draw (eg buy now, your 'waiting' month is November, then they go into December draw - buy in 4 weeks time, same result).

Paul_Herring

johnofhertford wrote:

Thank you for that, and may I award you the prize for most patronising response of the year.

No ta. Pot/kettle and all that...

On that basis all investing is gambling.

Of course it is. Investment (as opposed to saving) is, by definition, a gamble. For example betting whether the stock markets are going to go up or down by the time you cash in your shares.

Long term, share prices have continually risen, but that's not to say that they'll continue to do so.

Government bonds are also a gamble - look what happened in Germany between the two wars when hyperinflation hit. All the bond holders ended up with worthless bits of paper. (Granted, the likelihood of that happening again is miniscule, but there's still no guarantee it won't.)

Other investments that 'promise' at least your capital back at the end of the term that are based on the stock markets usually end up keeping the dividends from the shares that back the product - you're gambling the dividends you would have had against an increase in whatever index they're tracking.

Unless, of course, you know of some form of investment whereby you're guaranteed to get a return...?

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Paul_Herring wrote:

Investment (as opposed to saving) is, by definition, a gamble. For example betting whether the stock markets are going to go up or down by the time you cash in your shares.

Of course there is a risk investing in shares, but it's not like gambling - where one or more people have a stake in a fixed pot. You are taking a view on the prospects for the world economy and companies' future profits (which have tended to rise) - as well as a "bet" on how an individual share is currently rated.

The fundamental difference is that the "pot" has increased and is likely to continue increasing due to technology and human resourcefulness and the expanding use around the world of capitalist models.

asdaprice

Quote: "I wonder if anyone's ever tried to find out what % of premium bond winnings is reinvested rather than spent?"

Its easy to reinvest as you can set up your account to do it automatically - we dont all rush out to the shops at the sight of a £50 cheque